MF Global Trustee Seeks Third Transfer Of Customer Funds
November 29 2011 - 2:55PM
Dow Jones News
The trustee liquidating the brokerage arm of MF Global Holdings
(MFGLQ) on Tuesday sought to release a third wave of customer money
that would return funds to clients who have yet to be reunited with
their money, and get more back to other customers.
Trustee James Giddens's goal with the third transfer of
assets--up to $2.1 billion--is to "true-up" the accounts of all
former customers of the collapsed broker-dealer, according to a
spokesman for the trustee, after a series of fund transfers earlier
this month left some complaining of unfair treatment.
A motion was filed Tuesday to secure court approval for the
transfer, which is intended to get all former MF Global customers
66% or more of the money they had on deposit with the firm. Such a
move is targeted toward early December and will be the "most
complex" of the transfers to date, according to a statement from
the trustee.
Not all of the money can be released because of the
still-unexplained shortfall in customer money, the trustee has
said.
Giddens, in the days immediately following MF Global's Oct. 31
bankruptcy, allowed exchange operators like CME Group Inc. (CME) to
shift customers with open trading positions to other derivatives
brokerage firms, bringing along about 60% of the $2.5 billion in
collateral posted against those trades.
A second transfer sought to do the same thing for customers who
held only cash in their MF Global accounts, many of whom closed out
trades ahead of the firm's collapse and complained that their money
wound up being frozen for a longer period than those customers who
kept trades on.
The third transfer would raise up those levels up to 66% or
more, and would also bring to the same level customers who received
less than that amount of their MF Global-held assets in prior
transfers, according to the spokesman. If the transfer is
successful, about $4.1 billion in customer assets will be
released.
The process also would cover checks sent out by MF Global in its
final days before bankruptcy, which bounced when customers
attempted to deposit them.
"We've been excluded and I don't think that's fair," said Joe
Chiusano, an independent trader who cleared his transactions
through an MF Global-affiliated entity and has been out of the
market for the past month.
Chiusano, who traded mostly energy commodities, said he
attempted to close out his account on Oct. 31 and received a check
for his funds that ultimately was not honored.
CME told traders this week that those who received bad checks
from MF Global will need to file claims to get their funds
back.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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